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Medicaid & Long-Term Care Costs

Updated March 2017

MontGuide Co-authors

Marsha A. Goetting•MSU Professor & Extension

Family Economics Specialist

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Joel Schumacher•MSU Extension Economics

Associate Specialist

PowerPoint Developer

Keri Hayes •MSU Extension Economics Publications Assistant

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Major Concern of Families

• Will costs for long-term careexceed my/our savings?

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Fact• 70% of persons

age 65 or older• Will need long-term care

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Facts• Montana Average

Length of Stay (2016) 2.5 years 1 in 5 stay more than 5

years

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Nursing Home Care Costs 2017•Montana Average $ 6,819* monthly $ 81,826* yearly

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*Rounded

Who Pays????•Medicaid 61%•Residents & Families 32%

•Medicare 7%8

4 Ways to Provide for Long-term Care CO$T$

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Way…….#11. 32% Use Personal

Resources Current income Savings/Investments Sale of assets

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Way.……...#22. Purchase

• Regular long-term care insurance

• Long-Term Care Partnership Insurance Policy 12.6% over age 65

have LTC insurance 11

Long-Term Care Partnership Insurance Program

•MontGuide• www.montana.edu Search by title

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2017 Montana Long-Term Rate Comparison Guide (COMPREHENSIVE BENEFIT)

Company Age 55 Age 60 Age 65 Age 70

Bankers $746 $819 $956 $1,201

Genworth $383 $447 $549 $832

Massachusetts Mutual

$491 $523 $623 $850

Mutual of Omaha

$679 $696 $759 $864

New York $741 $789 $866 $1,158State Farm Mutual Auto

$968 $960 $1,000 $1,143

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2017 Montana Long-Term Rate Comparison Guide (COMPREHENSIVE BENEFIT)

Company Age 55 Age 60 Age 65 Age 70

Thrivent $624 $652 $802 $948

Transamerica $391 $481 $615 $808

United Security Assurance

$317 $366 $506 $707

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2017 Montana Long-Term Rate Comparison Guide• Available from Montana

Commission of Securities & Insurance

http://csimt.gov/wp-content/uploads/2017-LTC-Rate-Guide.pdf

Senior & Long Term Care Division-DPHHSSenior & Long Term Care Division-DPHHS

•Montana Legal Guide to Long Term Care Planning1-406-444-4077

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Way……...#3• Depend on relatives

to pay nursing home costs Most families

say no way!!!

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Way……….#4•Medicaid61% of Montanans in nursing homes receive Medicaid assistance

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Montana Eligibility Tests•Circumstances•Assets•Income

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Circumstances Test• 65 or older• Permanent U.S.

resident• Montana resident• Have a Social Security

Number• Medical criteria

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Assets Test

•ResourcesCountable Excluded

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Countable Resources:• Non-home real estate• Vehicles• Checking & savings accounts

• U.S. Savings Bonds 22

Countable Resources:•InvestmentsStocksBondsMutual funds

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CountableResources:• Retirement PlansKeogh accountsIRAs (Roth, Traditional)SEPsSIMPLES

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Countable Resources:•Retirement Plans (con’d.)

401 (k) plans403 (b) plans457 plans

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Countable Resources• Life estates• Oil & mineral rights• Assets in living (revocable) trusts

• Cash value in life insurance

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Countable Resources Summary

•Any asset over which individual has control are countable resources

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ExcludedResources

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Excluded Resources

• Home (Single Person)If applicant was living in it & expects to return to it within 6 months 29

Excluded Resources• Home (value less than $552,000) If used as primary residence by Spouse Other dependents 30

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Excluded Resources•Personal Effects•OrdinaryHousehold Goods

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Excluded Resources

•Cash value of life insurance Total value of $1,500 or less 32

Excluded Resources

•Burial plot•Burial fund $1,500

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Excluded Resources

•Irrevocable burial contractOn Montana approved form with funeral home

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Excluded resources•Livestock, if:

•Used to produce income•Raised for home consumption

•Used as pets35

Excluded resources•Income producing property Up to $6,000 of equity value

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Marital Assets

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Marital Assets

•Assets of both spouses are includedRegardless of whose name appears on titles 38

Marital Assets•Includes all separately & jointly owned Real & personal property

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Premarital Agreement• Doesn’t matter• All property is countable resource for Medicaid eligibility test

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Joint Tenancy Property

•ALL includedEven if children or grandchildren’s names are on document

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Solely Owned•Includes all property titled in separate names of spouses

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Andy &Nancy

•Each had wills to distribute his/her solely owned property to respective children

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Nancy & Andy

•9 months after their marriage

• Andy was diagnosed with Alzheimer’s disease

• All property of BOTH are countable resources

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Assets: Couple with children from prior marriage •Andy = $100,000

•Nancy = $800,000$900,000

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Community Spouse Protection• Can keep up to one-half of value of countable assets (2017) Minimum $48,360 Maximum $120,900

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Nancy Keeps

• Maximum •$120,900

• Remainder• $780,780

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Betsy & Bill

• Assets = $70,000• Bill can keep one-half $35,000 if Betsy goes in nursing home 48

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Budd & Sara•Assets = $314,000• Sara can keep maximum$120,900if Budd goes in nursing home

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Amounts over limit: Spend-down amount •Available resources must be “spent down” to $2,000 for nursing home spouse to be eligible for Medicaid

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Frank & Catherine

•Assets = $300,000 Catherine can keep

$120,900 Remainder of $179,100must be spent down to $2,000 before Frank is eligible for Medicaid 51

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Assets Test Summary

•ResourcesCountableExcluded

Income Test for Medicaid Eligibility

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•Most income received in name of Medicaid applicant is countable

Countable Income Examples

•Social Security•Retirement pensions•Railroad retirement•VA benefits

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Countable IncomeExamples (con’d.)

•Lease & rental income

•Dividends•Interest earnings

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Countable IncomeExamples

•Trust income•Annuity payments

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Rule•Income of an individual in a nursing home must be used to pay for his/her care

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Medicaid eligibility•If applicant’s cost of nursing home care is greater than income, income test is met

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Institutionalized Spouse•All income in nursing home spouse’s name is counted for the income test

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Personal NeedsAllowance

•Institutionalized personal $50 per month

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HealthInsurance•Can pay monthly premium cost from income

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Bruce: $2,000 income$50 personal care

allowance$550 health insurance$600 total allowance

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Bruce: $2,000 income

$2,000 income - $600 allowance$1,400 available

income for nursing home cost

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Medicaid Payment

Cost of Bruce’s Care $6,134Available Income $1,400Balance $4,734

• $4,734 Paid by Medicaid64

Marital Income

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•Community Spouse•Institutionalized Spouse

Community Spouse

•Can keep all income paid solely in his/her name

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Institutionalized Spouse•All income in nursing home spouse’s name is counted for the income test

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•1/2 institutionalized spouse

•1/2 community spouse

Income in names of both spouses will usually be attributed:

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Application Process for Medicaid Eligibility

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Forms• Resource Assessment• Pre-screening Medical

Determination• Application for

Assistance

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Resource Assessment•Based on first day of the month that an individual entered nursing home

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Resource Assessment

•DPHHS Form HCS 457

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Pre-screening determination

•Is the applicant in need of long term care services? 73

Pre-screening •Mountain Pacific Quality Health Care Foundation1-800-219-7035

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Application

• Montana Office of Public Assistance

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Decision on Eligibility•45 days from date of application

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Denial• Request hearingMust make written request within 90 days of denial

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Approved

• Issued a one-time permanent card

• Used to access eligibility data

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Front of Card

• Individual’s Name• Date of birth• Client I.D. number No Social Security Number

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Eligibility Requirements Summary

•Medical Needs Test•Assets Test•Income Test

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Transfer of Property Rules• Become “impoverished” to qualify for Medicaid Assistance

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Consequences• Legal• Tax• Emotional

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Look-Back Rules• Assets transferred

on or after February 7, 2006 5-year back rule

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Period of ineligibility• Depends on: Value of gift or

transfer When it was made

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Period of ineligibility• Number of months that would otherwise be required to spend the uncompensated value on nursing home care

Value based on average cost per month of nursing home care in Montana• $6,819 monthly

average• $224 per day 2017

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Example: John gifted stocks valued at $182,000 in 2017• 6 Adult children & spouses • 7 Grandchildren• No gift tax

• Annual Exclusion (Federal) $14,000 for each donee

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Ineligibility Calculation

• Value of John’s Gifts $182,000 Nursing Home Cost $6,819 = 26.69 monthsJohn ineligible for Medicaid for about 2½ years

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Family Decision

•Who/How are nursing home costs going to be paid for John?

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Transfers made before the look back period:

• Do not affect Medicaid eligibility 90

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Excluded Transfers• Home; if lived in by Community spouse Child less than age 21 Adult child Blind or Permanently disabled 91

Excluded Transfers

• Home, if…. Child lived in home Child provided care to

parent for at least 2 years Care allowed parent to

remain at home92

Excluded Transfers

•Home, if….. A sibling owns an interest & has lived there for one year

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Role of Trusts in the Protection of Assets

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What is a Trust??•Legal arrangement whereby an individual transfers assets into the name a trust

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Beneficiary?•Person(s) or organization(s) to whom the trustee distributes trust income or principal

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Revocable Living Trust• Created during owner’s lifetime

• Can be changed anytime

• Funds used to cover nursing home costs

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Irrevocable Trust•Person who established trust has no power to: Amend Cancel Remove 98

Trusts

•Contact an attorney to obtain legal advice 99

Emotional Consequences of “going on Medicaid”?

•Feelings of older adults of being on “welfare”

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Medicaid patients •Often more difficult to place in nursinghome

• Move more often

• Double in room 101

Medicaid Lien & Estate Recovery Program

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Federal Mandate

•States are required to:Recuperate costs for Medicaid recipients who pass away

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LienLien

•Must be paid before title to property can be sold or transferred

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• CreditorsMedicaid $24,000Funeral + 10,000Probate + 2,000Total $34,000Expenses

Robert: House valued at $75,000

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Son InheritsSon Inherits$75,000

- $34,000$41,000

Estate ValueExpensesLeft for Son

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Recovery procedures while Medicaid recipient living

Recovery procedures while Medicaid recipient living

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MontanaMontana•Files lien on real property owned by Medicaid recipient

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Medicaid Lien and Estate Recovery Program

•1-800-694-3084109

Senior & Long Term Care Division

• Questions about Medicaid

• 1-406-444-4077• http://dphhs.mt.gov/SLTC

/aging 110

Medicaid Recipient HotlineMedicaid Recipient Hotline

•1-800-362-8312

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Public Assistance Office• Medicaid Eligibility Specialist

• Telephone bookName of county

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Medicaid & Long-Term Care Costs

–MontGuide 199511